- The Washington Times - Friday, October 18, 2002

Enron Corp.'s chief energy trader during the California power crisis admitted in court yesterday that he and other traders bilked the state of hundreds of millions of dollars by manipulating prices.

The guilty plea by Timothy N. Belden, the former head of Enron's Portland, Ore., trading operations, represents the first major break in the government's investigation of the debacle that caused blackouts, drove California deeply into debt and contributed to an economywide energy crisis during 2000 and 2001.

As part of a cooperation agreement with the Justice Department, Belden admitted that Enron, through trading strategies with nicknames like "Get Shorty" and "Death Star," helped drive the price of power in California from $25 per megawatt hour to as high as $1,500.

The schemes illegally helped to balloon Enron's West Coast trading revenue from $50 million in 1999 to $800 million in 2001, according to the department.

"These charges answer the question that has long troubled California consumers: Whether the energy crisis was spurred in part by criminal activity. The answer is a resounding yes," said U.S. Attorney Kevin V. Ryan.

Belden, who made $6.5 million in one year while at Enron, faces up to five years in jail and $250,000 in fines, though his sentence is likely to be reduced in exchange for cooperation in implicating others involved in manipulating California's markets.

Belden also agreed to forfeit $2.1 million in salary and bonuses he made illegally through the schemes.

"I did it because I was trying to maximize profits for Enron," the 35-year-old trader told the U.S. District Court in San Francisco. "I knew at the time that I was submitting false statements."

His attorney, Cristina Arguedas, said Belden was following Enron's instructions. "Tim Belden is not a high-level executive who was lining his pockets out of greed," she told reporters at the courthouse.

The guilty plea vindicates California Gov. Gray Davis and state legislators who repeatedly urged the federal government to investigate whether Enron and other big energy companies were conspiring to drive up power prices in the state.

Sen. Barbara Boxer, California Democrat, called the guilty plea "only the beginning of justice" for the state and its consumers. She called on the Federal Energy Regulatory Commission to order $8.9 billion more in refunds for overcharges by power companies during the crisis.

The pleas for help from state officials fell largely on deaf ears in Washington until the spring, when the new management of the now-disgraced and bankrupt energy company released an internal memo describing the questionable trading strategies. It mentioned Belden by name.

The Justice Department's Corporate Fraud Task Force, created to address a wave of corporate crime beginning with the Enron scandal a year ago, immediately seized on the memo and began its investigation in conjunction with the energy agency and the Commodity Futures Trading Commission.

The government will use its cooperation agreement with Belden to pursue others at Enron and its trading partners who illegally manipulated the markets in California and on the West Coast, prosecutors said.

As part of his guilty plea, Belden admitted he had various co-conspirators at Enron. Two energy companies that have been widely reported as partners in some of Enron's questionable transactions are Avista and Portland General Electric.

"The conspiracy charged in this information allowed Enron to exploit and intensify the California energy crisis and prey on energy consumers at their most vulnerable moment," Deputy Attorney General Larry D. Thompson said.

Enron manipulated the market through various complicated strategies. At times it falsely claimed that the energy it supplied came from out of state to avoid federally imposed prices caps. The company also misrepresented the amount of electricity it would supply to force up prices.

The energy trading giant, once the largest in the world, also falsely created the appearance of congestion on California's power lines so that it could earn fees for relieving that congestion, the government said.

The payments California's grid operator made to Enron for the power supplies were wired through the Bank of America, making the schemes a kind of wire fraud subject to criminal penalties.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide